Detroit attempts to avoid Jefferson County’s fate

Posted on Feb 21, 2012 By Bond & Botes, PC

Jefferson County’s bankruptcy case, the largest such municipal bankruptcy in U.S. history, has attracted national attention. County authorities are hard-pressed to provide even basic services, such as affordable water and sewer service; according to BBC report, the county’s poorest can no longer afford to keep the water turned on. The New York Times reports that, in a decision rendered in January, federal bankruptcy judge Thomas B. Bennett openly expressed his doubts that “what was loaned can ever be repaid.”

The situation has concerned many outside the county. mlive’s Jeff Wattrick wonders if Detroit may suffer the same fate. Like Jefferson County, Detroit is in dire need of restructuring. Unlike Jefferson County, it has not yet filed for Chapter 9. The city has instituted an emergency manager to help reorganize the city’s costs and manage its debt—in a desperate attempt, Wattrick believes, to avoid the consequences that currently afflict Jefferson.

The concern in Detroit is not for the city itself, Wattrick notes. Detroit itself faces a long and difficult road ahead regardless of whether or not it files for Chapter 9 bankruptcy. However, the surrounding suburbs would also see a drop in their bond ratings should the city enter Chapter 9.

Leave a Reply